Re Michael William Wallace Ex Parte: Susan Marie Wallace [1993] FCA 249 (28 May 1993)

FEDERAL COURT OF AUSTRALIA

Re: MICHAEL WILLIAM WALLACE
Ex Parte: SUSAN MARIE WALLACE
No. NN4248 of 1992
FED No. 348
Number of pages - 2
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Whitlam J(1)

CATCHWORDS

Bankruptcy - Family Court order for payment of fixed sum within specified period, or, in default, for sale of property with payment of percentage of proceeds - whether first part of order "final".

Bankruptcy Act 1966 - s 40(1)(g)

Re Nemeth; Ex parte Nemeth (1987) 15 FCR 155

HEARING

SYDNEY, 16 March 1993
28:5:1993

Counsel for the applicants: G. T. Johnson

Instructed by Brian T. G. Muir

Counsel for the debtor: R. E. Montgomery

Instructed by Commins Hendricks

DECISION

WHITLAM J This is an application to review the setting aside of a bankruptcy notice by a Registrar.

2. The applicant submits that she is a creditor who has obtained a final order against a debtor within the meaning of s 40(1)(g) of the Bankruptcy Act 1966. The order upon which she relies was made by the Family Court of Australia and, so far as relevant, is the following terms:
"IT IS ORDERED:-

...
2. That the husband pay forthwith into the account of Carissa
Marie Wallace at the Commonwealth Savings Bank in Temora
being Account No. 606934 the sum of five thousand dollars
($5,000.00) such sum being deemed to be a payment to the
wife.
3. That the husband pay within three (3) months of these orders
coming into effect the sum of two hundred and eight thousand
three hundred and ten dollars and forty cents ($208,310.40)
to the wife or her solicitors and that upon payment of such
sum within the time specified and provided always that the
said sum referred to in Order 2 herein has also been paid
then the wife transfer to the husband all of her right title
and interest in the jointly owned five (5) ordinary shares
in the company Caerphilly Pty Limited and transfer to the
husband all of her right title and interest in the jointly
owned five thousand (5,000) cumulative preference shares in
such company.
...
8. That in the event that the husband fails to pay the monies
specified in order number 2 and 3 herein within three (3)
months of these orders coming into effect then the husband
and the wife do all acts and things and sign all documents
to effect a sale by the said company of the properties and
land being:-
...
11. That upon completion of the sale the husband and wife do all
things and sign all documents necessary to ensure that the
proceeds of the sale be applied as follows:-
(i) firstly, to pay all costs, commissions and expenses of
the sale and to pay any council and water rates and
maintenance levies outstanding in respect of the said
Real Property;
(ii) secondly, to discharge the mortgage to the
Commonwealth Bank of Australia affecting the Real
Property; and
(iii) thirdly, the balance then remaining be divided in the
proportions of:-
(a) sixty percentum (60%) thereof to the husband;
(b) forty percentum (40%) thereof to the wife
including five thousand dollars ($5,00.00) paid
to the said Carissa Marie Wallace if this has
been done.
12. That pending the payment or completion of the sale:-
(a) the husband have the sole right to occupy the said
Real Property and that during such right of occupation
the husband pay all instalments pursuant to the
mortgage and all rates and taxes and like
apportionable outgoings, insurance, of such real
property as they fall due;
(b) the parties hold their respective interests in the
said Real Property upon trust pursuant to these
orders; and
(c) neither party shall do anything or cause anything to
be done so as to encumber the said Real Property
without the consent of the other party.
13. That liberty be reserved to either party to apply herein
with respect to the terms and conditions of an execution of
the sale.
14. That in the event that the husband refuses or neglects to
comply with any provisions of this order:-
(i) The Registrar of this Court be appointed to execute
all deeds and documents in the name of the husband and
do all acts and things necessary to give validity and
operation to the said order;
(ii) the husband in default pay any and all foreseeable
damages to the wife caused by his default; and
(iii) the husband in default pay all reasonable costs
incurred by the wife for the purpose of enforcing this
order and proving her damages.
15. That upon the payment to the wife of the percentage of the
proceeds of sale as provided in order number 11 herein the
wife transfer to the husband all her right title and
interest in the jointly owned five ordinary shares in the
said company and all her right title and interest in the
jointly owned five thousand (5,000) cumulative preference
shares in such company.
...

3. The question for determination is whether what is described in paragraph 8 as "order (sic) number 2 and 3 herein" is "final" for the purpose of s 40(1)(g) of the Act. The applicant submits that the order is akin to that considered to be final by the Full Court in Re Nemeth; Ex parte Nemeth (1987) 15 FCR 155. I do not accept this submission.

4. The provisions of paragraphs 2 and 3 on the one hand and of paragraph 8 and following on the other are not "quite separate and distinct" in the way that the orders were in Nemeth. In that case the subsequent event did not depend upon the whim of the husband who was given no choice whether to pay the money in the first order. As the Full Court said (at 157) the second order "merely affords the appellant an alternative remedy in the event of the husband having insufficient assets to comply with the first order."

5. Here the order is quite different. The provisions appear on the face to be interdependent. Since the making of the order the applicant has been obliged to transfer her interest in the family company shares under either paragraph 3 or paragraph 15 of the order. That obligation could have arisen within three months had the respondent chosen to pay the sums specified in paragraphs 2 and 3 of the order. Now that obligation will arise upon the payment to the applicant of forty percent of the balance under paragraph 11 (iii)(b) of the order. It is significant that this lastmentioned provision provides the respondent with a credit for the payment of the sum of $5,000 under paragraph 2 "if this has been done." This wording supports the construction that the payment of the sum under paragraph 3 is at the option of the respondent and does not constitute a "final order."

6. I think that the construction outlined above appears from the very terms of the order. However, when regard is had to the judgment of the trial judge, there can be no doubt that this is what was intended. His Honour said:

"There will be final orders to reflect a division of 60:40 in
favour of the husband.
On the values found this amounts to $213,310.40 to the wife and
$319,965.60 to the husband.
The prospect is that the property will need to be sold and if this
is so the wife will receive 40% (less $5,000 if this has been paid
to Carissa) after expenses. However the husband is to have an
opportunity to buy out her interest based on the found values and
the final orders will provide for this.
The wife is particularly anxious that the husband provide money
promptly to Carissa to allow her to establish herself in
accommodation appropriate for her studies. The wife will accept a
payment of $5,000 to the elder daughter as if a payment to
herself. I propose to adapt the final form of order to facilitate
this legitimate plan." (pp 8-9)

7. In my opinion paragraph 3 was spent upon the expiration of three months after the order came into effect. The application is dismissed with costs.